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Applications Modernization: A Guide for CIO's: Why Modernize
 

Applications Modernization: A Guide for CIO's: Why Modernize

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The Business Case for applications modernization

The Business Case for applications modernization
is about creating a high-performance organization
that can respond to change and is ready to grow.

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    Applications Modernization: A Guide for CIO's: Why Modernize Applications Modernization: A Guide for CIO's: Why Modernize Document Transcript

    • Applications ModernizationA Guide for CIOs: Why Modernize?White paper position your enterprise for cost-effective and agile growth. The business case for applications modernization is about creating a high-performance organization that can respond to change and is ready to grow. You need to align your applications portfolio to your enterprise, operation, and budget needs. This makes modernization both a key to business success and a significant technology challenge for today’s chief information officer.
    • Table of contentsEvaluating reality......................................................1Technology direction.................................................1Defining the path. ....................................................3 .Rationalizing risk......................................................4Modernization strategy and benefits...........................6 .Targeted architecture and the cloud. ...........................7 .Summary. ...............................................................8 .About the author......................................................9
    • There is a high cost to doing nothing.Maintaining your current legacy systemsdiverts up to 80% of your IT budget and staffresources—an expense that grows incrementallyeach year. Applications modernization deliversgreater performance with lower cost and risk,positioning your organization for innovationand growth. Evaluating reality Technology direction The evolutionary and transformative nature of Throughout the years, IT departments have embraced information technology (IT) means that we live in new technological advances and openly brought a a world where we must interact with both legacy variety of platforms and differing technologies into and newer technologies. This creates an ongoing the data center. This has created the need for more challenge for enterprises like yours: you must staff with varying skill sets to support the variety of bridge the gap between the old and the new, but systems. By reversing this trend with standardization also develop a strategy and a plan that keeps the and reduction of complexity, support costs can be organization as cost-effective and agile as possible. trimmed through leveraged support from resources and elimination of unique skills, which provides a This perpetual cycle within your business also lower total cost of ownership. means change, and IT is the enabler of that change. For example, evolving business rules force the IT Let’s look at this more in depth: the inclusion of department to continually implement updates and new technologies through time has contributed to enhancements to applications. This adaptive model technological sprawl across your organization, necessitates an applications architecture that can supported by expansion of staff within the IT easily assimilate requests to meet the ever-shifting department. Although many of these initiatives needs of today’s business challenges. were born from business need to adapt to the changing landscape, you need to overcome the Despite the obstacles, it’s critical that this business complex environments of decades of growth and momentum be supported. Growth is no longer an implementation of a variety of technologies. Some option but the catalyst to sustain the health of the degree of standardization is crucial to provide a organization. So, how can IT support this fluctuating robust business ecosystem. environment? It requires a holistic view of the organization, agility in the applications environment, a close partnership with the business units, and an eye on fiscal responsibility. 1
    • But it can be a difficult transition. Legacy systems have This standard also provides re-use of developed assetshistorically provided a stable operating environment and business rules, creating an agile environmentand have proven to be a valuable asset, but are within the IT department where the needs of theresistant to adaptability, have high operating costs, user community are better served. Decreased timeand have become overly complex throughout the to implement changes not only reduces cost, but theyears within the production environment. Because of reusability of common services provides less risk in thethe arduous process of completing changes within development environment while increasing speed tothese aging technologies, CIOs must weigh options market for new offerings.for management of these systems. With shrinking Emerging standards also influence the transformationbudgets, limited risk tolerance, and the need for plan and may include cloud-based approaches thatimproved support to the business function, applications can help to defer or eliminate capital investmentsmodernization can help to resolve some of these while providing elasticity in the infrastructure supportpressing issues. for applications usage. Techniques such as thisWhat are some key factors in this modernization? have gained wide adoptability and have provenTransformation imperatives have become a necessity to be beneficial in terms of costs, capital planning,to reduce application sprawl and the legacy issues flexible infrastructure provisioning and management,that exist within your environment. One critical element increased mobility, and the ability to make innovationis keeping the focus on the technological direction to a a higher priority within the enterprise.progressively adaptable architecture—it must be one Further, technology direction must be planned tothat will serve the needs of the enterprise today and support the business environment. The IT departmentinto the future. This approach provides the business can no longer force technological change upon thefoundation for the transformation objective. organization at will, but must find the architecture thatAnother consideration is your architecture. Current provides the most flexible approach to running thearchitectural standards typically revolve around a business within a fiscally responsible framework. Aservice-oriented architecture (SOA) that provides transformation plan does not need to be viewed asa loose coupling of services. Its aim is designing disruptive to either IT or the business fabric. Rather,reusable components that group functionality around using the right balance of best practices with abusiness processes. This architectural style lends itself robust architecture that is flexible and adaptable, theto a robust integration of data and business rules. changes can add immediate value with low risk.These services are cataloged in a repository wherethey can be consumed by many applications, thusleveraging the code base and business logic, reducingdevelopment and maintenance costs. 2
    • Figure 1 People Business Technology • Specialized skills • Time-to-market • Innovation • High turnover pressures • Legacy assets • Labor costs • Predictable delivery • Complexity • Scarce resources and service levels • Scalability • Lack of industry • Operating expenses • Integration knowledge • Applications portfolio • Quality of service managementDefining the path Within this first assessment phase of modernization, you’ll want to look at many elements. The aboveIs it a smart choice to standardize upon the legacy figure illustrates some of the basic data that must beenvironments with which we are already comfortable? gathered within three key areas—People, Business,This has been a dilemma for quite some time: and Technology. All three elements also have aWhen do you challenge the status quo? How do baseline of associated cost to get a full view into theyou determine if your current systems are adversely applications within this assessment.affecting the bottom line of the business? This requires Once the data is collected and analyzed, a clearanalysis of the current operating environment to picture will begin to emerge as to total cost ofencompass not just the IT department, but all the users ownership, technical quality, functional quality, andof the applications as well. the action that may be necessary to mitigate the risk toTo do this effectively, it is imperative to take a holistic ongoing business activities.view of the enterprise. Analysis of the technical At this point in the assessment, you must look at manyaspects of the business applications must be charted, intangibles: the issues of today, the plans for tomorrow,along with the functional quality and the total cost of the concerns and thoughts on the minds of the businessownership. This view into the portfolio and analysis of users, and the plans of those users for modifying orthe facts can divulge the truth of current systems—both adding new products, services, or business processespositive and negative –and help to define a path by as they strive to profitably grow the enterprise.providing a comprehensive view of your applicationsportfolio and determining how well the business is At this phase, IT cannot work in isolation, but mustbeing served by those applications. collaboratively address the concerns, issues, and changes throughout the business, as well as keepThis initiative needs to examine both strengths and a balanced viewpoint into the technology and howweaknesses, which will ultimately lead to better it can provide the best levels of service within thebusiness planning. Also, the IT department must changing landscape of business applications.partner throughout the process with the businessunits—this will ensure that you bring all operationalaspects into the planning function for the futurestate architectural environment. It’s important thatyou understand the current business performanceto ascertain the suitability of the applications withinscope of this analysis. 3
    • Rationalizing risk key components for calculating total cost of ownership and ease of change to the systems. An additionalIf it isn’t broke, don’t fix it. While that paradigm may consideration, often overlooked, is any technologywell seem to be the best approach and may have that may be losing vendor support soon, which posesbeen successful for years, the dynamically changing significant risk to business continuity plans.business world has left CIOs with many unexpectedchallenges. With constantly constricting budgets and Another key risk associated with legacy systems is therising expectations from the business community, how support resources themselves. These mission-criticalcan the IT department keep pace? applications have been in use for many years, using older technologies. Although they have proven toLooking at allocations of the budget for spend against be stable over time, coding standards and systemmaintaining activities, we find that on average, an documentation are typically inadequate to supportoverabundance of the IT budget is utilized by ongoing maintenance of these systems. The issuemaintenance of the existing environment. here is that your key resources who know theseThis staggering summation of IT spend shows the applications well and have kept them running yearprimary reason that CIOs struggle to find resources after year are now beginning to retire—and youngerto meet the needs of the business. Quite simply, technicians are not trained on outdated technologies.IT departments expend too much time, money, It’s widely estimated that 70% of business applicationsand effort to just maintain the present applications running today are still written in COBOL, whichenvironment and have limited cycles left over for creates a high-risk potential within the environment asnew initiatives. Modernization activities can even out the resources that understand this technology leave thethe disproportionate amount of budget and effort of workplace. Most college curriculums no longer includemaintaining systems. This will allow more investment COBOL for IT majors; therefore, the aging workforceinto new initiatives by redirecting budget from for COBOL support has limited backup, and the businessmaintaining the status quo into higher value projects may be left scrambling for support at inopportunethat will help the business grow—all while potentially times. Hiring support resources for these systems isreducing the overall IT budget allocation. difficult at best. Most recent college graduates have noBut maintenance costs aren’t the only reason to move knowledge or experience in these legacy technologies,away from legacy applications. There are many risks and in fact have no interest in taking a job where thisassociated with older legacy applications that must be would be their primary function. They see the newtaken into consideration when assessing your risk profile. technology trends of today and tomorrow as theirAge, complexity of the system, and support resources are focal point to grow their careers. 4
    • So, while there is risk and cost associated with limited experience working with COBOL and areapplications modernization, the new architectural struggling to debug the ailing code. They look forstandards, tools, and processes in use today to system documentation to help with their assessment,support such initiatives have created a safety net for but the documentation is limited and no help to themodernization projects. Consider all aspects of your team. If this outage is prolonged, you will have workenvironment to understand your risk profile and the stoppages due to critical systems being unavailable,challenges you face. Modernization can provide thus creating a loss for the corporation.an effective risk-mitigation strategy to help stabilize Leaving issues unresolved until you are forced to dealyour environment while providing relief to your most with them can become more expensive to remediate,problematic applications management issues. increase your risk profile, and force the enterpriseWhile modernization of legacy systems may not always to react to extreme situations with little more than abe called for, a thorough analysis of the current temporary fix to a problem that needs a proactivesituation and consideration of the future direction of solution. Planning for a transformation is not easy,the organization will help to solidify and validate the nor should a modernization effort be done all atbest transformation plan for that specific environment. once. It takes patience, persistence, and purpose to understand where you are today, determine whereIs there a risk and cost for doing nothing? you want to get to, and ultimately know how toThe answer here is absolutely yes. Imagine this successfully execute those plans.scenario: your mission-critical applications havebeen running fine for years although you have many Part of your road map for optimal business continuityincomplete enhancements for a number of these assurance is realizing that your technology planlegacy systems. You recently celebrated retirement revolves around a number of key transformationparties for a good portion of your long-standing initiatives and moving your aging applications toemployees who have done a great job of keeping your future state architecture. Taking the proactivethese systems running. When something failed, they approach allows you to complete transformationwere called, day or night, and were able to get the activities in a measured cadence without introducingsystems running again in no time. unnecessary risk in the process. It also allows you to complete the work without the reactionary urgencyYou now find that a mission-critical system outage needed when you are forced into time-sensitive,has created a disruption within your supply chain. unforeseen modifications to your systems.Your back-up developers have been called towork on the issue. The only problem is they have 5
    • Figure 2 Business Value Technical Agility • Improve performance • SOA • Speed to market • Ability to change • Regulatory compliance • Obsolescence • Industry knowledge Solution Cost Containment • License reduction • Maintenance reduction • Resource optimizationModernization strategy and benefits One future benefit or objective that can’t be overlooked in modernization is the ability to leverageThere are many benefits in completing an applications the existing investments from business rules embeddedmodernization, and the success of any high-profile in legacy applications. This information is extractedventure is dependent on many factors. To implement a from existing systems and applied to modernizedsuccessful applications modernization campaign, the applications using a variety of strategies, tools,project team must have a thorough understanding of and techniques. This not only reduces the risk forboth the older legacy technologies and the newer transformation activities, but also leverages thetargeted technologies. This means developing a investments made in these applications—especiallycomprehensive understanding of the existing where documentation may be limited and theenvironment as well as developing a future state embedded business rules not fully understood.architecture when beginning an applicationsmodernization initiative. Of course, many other benefits are achievable through a modernization program, including future-You also need to know and understand your business proofing applications by developing next-generationobjectives or end benefits. What is it that your architectures that allow flexibility and agility withinparticular enterprise wants or needs to achieve? When the applications enterprise. This provides stabilityanalyzing IT initiatives, including modernization, and an environment that benefits the IT department,a business case must be developed that measures users, and the business as a whole. By modernizingthree key aspects in determining the final solution. your applications, you may also realize productivityThe proposed solution must provide one or more of increases, risk abatement in the form of agility to thethe following value points—Business Value, Technical enterprise and the IT department, and, of course,Agility, and/or Cost Containment. When you view budget optimization.these three benefit categories in context of a specificproject, each individual initiative will stand upon itsown merits. The benefit categories will shift dependentupon needed value, and the intersection of all threerepresents the value proposition and business casejustification for a modernization project. 6
    • Targeted architecture and the cloud plans for moving their organizations, applications, and business assets to new environments. The benefitsDefining your future state architecture is a complex are plentiful for optimizing to cloud architectures, butquestion that has intensified with inclusion of cloud it must be based upon the individual technology andtechnologies as all organizations assess the value business models of each individual enterprise.that cloud brings. How do you migrate to currentapplications architectures? Does the cloud play a part Cloud initiatives are often a main considerationin applications modernization? during the planning stages of transformation, since modernization at its core is reflective of the currentWhile rationalizing your current technology architecture, future state of operations, and businessenvironment, you must also weigh in the factors that priorities. Reducing the need for capital expendituresdefine your future technology plan. This will inherently by operating in a cloud environment has hugecreate hybrid solutions that all organizations need to potential benefits, and can also aid in the reductionbalance to stay ahead of the curve, both technically of energy usage. Energy savings and expansion ofand from business and economic perspectives. the longevity of the data center through this newThis hybrid approach can include targeted architectural model will optimize IT budgets whilearchitectures, such as SOA, which have become more providing the robust operating environments thatubiquitous. Leveraging the value of this architecture business units demand of the IT department.has become a natural fit for many modernization However, as noted above, developing a viewpoint ofstrategies, but each modernization initiative must optimal usage of cloud will differ for each enterprisebe evaluated upon its own merits. This cannot be a and must be analyzed to determine the proper course.prescriptive approach; instead, we must provide the Whether you should move some of your applications orsolution that best supports the business models and even carve off specific functional pieces to the cloud arevalue propositions for each engagement. Always scenarios that need to be reviewed for each specifictaking a standardized approach without analysis of situation. There are many factors for analyzing theall factors will undoubtedly put at risk the ongoing effectiveness and efficiencies to be gained from abusiness value and optimization of the modernization cloud initiative—including usage statistics, businessproject as it relates to efficiency and profitability. criticality, data sensitivity, security requirements,We must also factor in the cloud environment and application accessibility requirements, availability,measure the value and accessibility of migrating reliability, and others. This is a complex topic, and theresolutions and applications to public or private cloud is no one right answer. Therefore, an assessment of youroptions, while evaluating the security posture for this environment, balanced with your future plans, needs tonew platform as well. This is no easy decision for be completed as part of a transformational initiative.CIOs, and they must consider all aspects as they forge 7
    • Summary Applications modernization provides a path to an agile, flexible computing climate in which the businessAs IT has matured over the years, there are needs are the paramount focus to the established IThuge benefits to be gained from applications operational environment. Transforming to the futuremodernization. While this initiative can provide state plan is not a sprint, but a measured approachsignificant cost savings for the business, the resulting of designed waves of initiatives that provide ongoingagility gained to support business momentum and returned value to the organization. This approachmovement is crucial to the health of the organization. yields achievable results without significant disruptionA holistic analysis, business case, and value to the business ecosystem, providing rolling costproposition will ultimately decide the feasibility for a savings through modernized application environmentstransformation program. while optimizing business continuity. Planning andEach enterprise must take a close look at its specific executing a transformation plan require the patiencesituation to determine an individualized plan for and persistence of the CIO and team to successfullytransformation. Every organization must evaluate implement the plan in the environment, obtainingits unique situation, look for its weaknesses, and technical resilience with results that are based uponbuild upon its strengths. Organizations must plan evolving business needs.for the optimal approach to mitigate existing risks,transform the way IT is structured to support thecurrent business imperatives, and ultimately supportthe stated business direction.It isn’t easy. CIOs are tasked with providing IT serviceseconomically while assuring the flexibility to adapt tothe changing business landscape. Many organizationsstruggle with this requirement as they have limitedbudget available for new innovative initiatives neededto support changing business domains. Without a planto shift budget away from pure maintenance activities,IT organizations will endure tremendous pressure tomeet the constantly evolving changes that are thebusiness norm. 8
    • About the authorJeff MisustinJeff Misustin is a regional leader in the applicationservices worldwide product marketing group andbrings more than 20 years’ experience in the computertechnology field in both the public and private sectors.Misustin has a breadth of experience focusingprimarily on application services but has experiencein managing all facets of IT delivery and services. Hehas worked within complex environments bringinginnovative solutions to provide comprehensivesuccessful outcomes for our clients. 9
    • Share with colleagues Get connected www.hp.com/go/getconnected Get the insider view on tech trends, alerts, and HP solutions for better business outcomes© Copyright 2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The onlywarranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing hereinshould be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.4AA3-6820ENW, Created December 2011